The U.S. Dollar rose against risk-sensitive currencies including Sterling and the Australian Dollar on Thursday, as concerns over faster policy tightening by the Federal Reserve hit market sentiment.

The Dollar also stayed near a five-year high against the Yen, bolstered by surging U.S. Treasury yields on mounting predictions for a rate hike in the U.S. in March.

The Fed minutes published on Wednesday took a more hawkish stance than predicted, impacting riskier assets and bolstering the Dollar and bond yields.

The minutes revealed Fed officials said that a "very tight" job market and relentless inflation could increase the need to hike interest rates sooner than forecast.

"With odds for a rate hike in March rising and the threat of QT this year, the USD should maintain resilient form," according to TD Securities strategists.

"That should leave USDJPY supported over time, though we think a very hawkish Fed could cause some short-term indigestion for risk markets."

Furthermore, the U.S. Dollar index – measuring the greenback against six major peers – rose 0.08% to 96.259 following a rebound on Wednesday from losses of 0.44% on the release of the minutes.

The Australian Dollar declined 0.68% to $0.7170, from Wednesday’s $0.7273.

Elsewhere, the Pound was trading at $1.3526, down from $1.3599, close to a two-month high, after the Federal Reserve minutes were published. The Euro stood at $1.1305 as it consolidated in the middle of its trading range since November.

Moreover, the Dollar lost 0.2% against the Yen to hit 115.87, not far from Tuesday’s high of 116.355, the highest since the beginning of 2017.

"Trend and momentum dynamics continue to favour the USD, but prices will have to pierce the Q4 2021 highs in order to reassert the uptrends in most cases," particularly against the Euro, Sterling and Australian Dollar, said George Davis, RBC strategist.